LEEP Online Program: Budget and Return on Investment Issues A report by Celeste Scholz, and NandhiniPadmanabhan, and Nancy Kogin
Introduction
The LEEP business model is unique: LEEP is designed not as a separate program, but is fully integrated into the School’s master’s degree program. From a finance perspective, this means that LEEP is not its own cost center; LEEP costs and revenues are a part of the GSLIS budget. This report focuses on bringing to light some of the financial and budgetary implications of this model.
Budget
In 1996 the University allocated $600,000 to the start-up of LEEP. However, after the initial launch of LEEP, the University provided no further monetary support and the School has been responsible for covering all costs.
The school retains the tuition revenue generated by LEEP. Because LEEP is not a separate cost center, resources within GSLIS (faculty, infrastructure, etc) are used interchangeably between the on-campus and online programs. Since the revenues are generated and used internally within GSLIS, the School does not keep precise budget figures for costs pertaining to LEEP (Estabrook, 2001).
The School participates in the University-wide budget review process in order to set its annual budget. For fiscal year 2011, GSLIS has a budgeted expenditure forecast of about $12.1 million. Out of this, the original state budget is around $7.8 million (DMI Line 2000). The school also receives close to $3.5 million in Gifts, Grants and Contracts (U of I Budget Summary for Operations 2011).
We have contacted the program coordinator for current budget information specific to LEEP. While at this time we do not have current estimated budget figures for LEEP, data from the first six years of the program’s operation shed light on the financial stability of this model.
As seen in the below graph, LEEP tuition began to cover its costs in year four. Estabrook (2001) reports that this cost recovery did not meet the original goal, partly because the program accepted a higher percentage of in-state applicants than planned for in the financial model (pg. 76). Since LEEP is a scheduling option, rather than a separate degree program, tuition rates for online students follow the same tuition rates as on-campus students. In-state tuition is considerably reduced. Thus, the lower enrollment of out-of-state students resulted in a longer cost-recovery period.
Figure 1. Source: Estabrook, 2001, pg. 75
Data from the first six years of the program also reveal interesting information about the program’s business model. Faculty salaries made up a large percent of the original LEEP budget; the budget allowed for an increase of 5 faculty members for GSLIS. However, all GSLIS faculty teach both online and on campus courses and faculty members receive release time to develop the online course and a decreased teaching load the first time they teach a course. As faculty gained experience teaching online classes, the added cost of teaching online courses began to decline in FY01.
The budget data also reveals that the majority of LEEP expenses were internal. LEEP was the first online degree program offered at UIUC which required that GSLIS handle internally the design, development and support of the program. Human resources costs included instructional design staff to assist faculty in developing their online courses and IT staff to assist faculty and students with technology issues. The budget also includes line items for administrative and support staff. By FY04, LEEP was supported by a LEEP coordinator, graduate students, an IT staff of 7, and a instructional design team of 2 (ALA, 2004, pg. 16).
Figure 2. Source: Estabrook, 2001, pg. 75
The budget also included start-up funds for equipment and software and administrative support of the program. LEEP used an in-house LMS to start with, which was replaced by Moodle in 2007, an open-source option. In FY01 a line item appeared for “Campus Charges for services” which suggests support for university services for LEEP students.
Figure 2. Source: Estabrook, 2001, pg. 75
FY96-FY02 costs reveal that the program budgeted for faculty overhead (office space, computers, etc) and travel to conferences. The original budget also included funds for an independent evaluation after the first and second years of the program.
Data from the first years of the program suggest that LEEP was well-funded and covered the three types of budget related to e-learning: design and development, marketing and delivery, and ongoing maintenance (Khan, 2006, pg. 28). The 2004 ALA External Report Panel Report shows that this trend continued: "From evidence available, it appears that the School has adequate administrative support and receives adequate financial support to accomplish its mission.” (ALA, 2004, pg. 15)
Return on Investment
During the 1998-1999 academic year, Dr. Edward Kingsley Mensah conducted a return on investment analysis for LEEP graduates (Estabrook, 2001). If the graduate remained in Illinois as a librarian, their return on investment was $15.23 per dollar invested over the remaining life of the individual. This figure was significantly higher, $29.52, for those who later worked in non-library occupations.
Other budget information reported by Estabrook for FY1996 to FY2002 shows that in 1996 the GSLIS budget was $1.1 million and in 2002 it grew to $3.3 million, directly attributable to LEEP. During that same time, the school’s percent of the academic budget doubled from .4 to .8 percent. (2001, pg 78) In 2010-2011, GSLIS’s LEEP students represented 25% of all online graduate students at UIUC with a $300 cost per instructional unit (IU).
There were other returns on investment that weren’t monetary, but represented important benefits to students. The five benefits detailed by Estabrook (2001, p 77) are the following: (1) LEEP students rapidly gain distance technology skills. (2) Asynchronous technologies enrich GSLIS teaching and learning for all students. (3) With LEEP-generated funds, students have access to more courses from additional faculty hired from around the country. (4) All GSLIS students benefit from the diverse and international perspectives of LEEP's international student body. (5) All students benefit from the extracurricular activities such as workshops and and lectures that are taped for the LEEP students.
In addition, Estabrook (2001, p 78) described five important benefits to the school. (1) All GSLIS faculty have become quickly proficient in asynchronous technologies, making LEEP the only LIS degree program recognized with the Sloan-C award for the Most Outstanding Asynchronous Learning Network (ALN) in 2001. (2) On-campus students have access to courses via the ALN that they would otherwise not have. (3) There is a cost savings of 3-4 additional course sections because on-campus and Fridays-only students enroll in LEEP courses. (4) The LEEP budget supports faculty computer upgrades every 2-3 years. (5) The retention of 3-5 students per year is due directly to the high quality of the LEEP technology staff.
Additional money for long term planning of eLearning
Univerity of Illinois is a research university and GSLIS currently has $16M in research grants in progress with funding from a wide range of government funders, private foundations and corporate partners. A review of the GSLIS 2010 Showcase of Research Abstracts shows that many of them are related to technology and learning, such as broadband technology and iPhone applications. In addition, one multi-year grant started in 2007 is funded by the Institute of Museum and Library Services for the development of the Information in Society concentration at GSLIS. As LEEP is a scheduling option and not a cost center, it directly benefits from the research and development funded by these grants.
A report by Celeste Scholz, and Nandhini Padmanabhan, and Nancy Kogin
Introduction
The LEEP business model is unique: LEEP is designed not as a separate program, but is fully integrated into the School’s master’s degree program. From a finance perspective, this means that LEEP is not its own cost center; LEEP costs and revenues are a part of the GSLIS budget. This report focuses on bringing to light some of the financial and budgetary implications of this model.
Budget
In 1996 the University allocated $600,000 to the start-up of LEEP. However, after the initial launch of LEEP, the University provided no further monetary support and the School has been responsible for covering all costs.
The school retains the tuition revenue generated by LEEP. Because LEEP is not a separate cost center, resources within GSLIS (faculty, infrastructure, etc) are used interchangeably between the on-campus and online programs. Since the revenues are generated and used internally within GSLIS, the School does not keep precise budget figures for costs pertaining to LEEP (Estabrook, 2001).
The School participates in the University-wide budget review process in order to set its annual budget. For fiscal year 2011, GSLIS has a budgeted expenditure forecast of about $12.1 million. Out of this, the original state budget is around $7.8 million (DMI Line 2000). The school also receives close to $3.5 million in Gifts, Grants and Contracts (U of I Budget Summary for Operations 2011).
We have contacted the program coordinator for current budget information specific to LEEP. While at this time we do not have current estimated budget figures for LEEP, data from the first six years of the program’s operation shed light on the financial stability of this model.
As seen in the below graph, LEEP tuition began to cover its costs in year four. Estabrook (2001) reports that this cost recovery did not meet the original goal, partly because the program accepted a higher percentage of in-state applicants than planned for in the financial model (pg. 76). Since LEEP is a scheduling option, rather than a separate degree program, tuition rates for online students follow the same tuition rates as on-campus students. In-state tuition is considerably reduced. Thus, the lower enrollment of out-of-state students resulted in a longer cost-recovery period.
Data from the first six years of the program also reveal interesting information about the program’s business model. Faculty salaries made up a large percent of the original LEEP budget; the budget allowed for an increase of 5 faculty members for GSLIS. However, all GSLIS faculty teach both online and on campus courses and faculty members receive release time to develop the online course and a decreased teaching load the first time they teach a course. As faculty gained experience teaching online classes, the added cost of teaching online courses began to decline in FY01.
The budget data also reveals that the majority of LEEP expenses were internal. LEEP was the first online degree program offered at UIUC which required that GSLIS handle internally the design, development and support of the program. Human resources costs included instructional design staff to assist faculty in developing their online courses and IT staff to assist faculty and students with technology issues. The budget also includes line items for administrative and support staff. By FY04, LEEP was supported by a LEEP coordinator, graduate students, an IT staff of 7, and a instructional design team of 2 (ALA, 2004, pg. 16).
The budget also included start-up funds for equipment and software and administrative support of the program. LEEP used an in-house LMS to start with, which was replaced by Moodle in 2007, an open-source option. In FY01 a line item appeared for “Campus Charges for services” which suggests support for university services for LEEP students.
FY96-FY02 costs reveal that the program budgeted for faculty overhead (office space, computers, etc) and travel to conferences. The original budget also included funds for an independent evaluation after the first and second years of the program.
Data from the first years of the program suggest that LEEP was well-funded and covered the three types of budget related to e-learning: design and development, marketing and delivery, and ongoing maintenance (Khan, 2006, pg. 28). The 2004 ALA External Report Panel Report shows that this trend continued: "From evidence available, it appears that the School has adequate administrative support and receives adequate financial support to accomplish its mission.” (ALA, 2004, pg. 15)
Return on Investment
During the 1998-1999 academic year, Dr. Edward Kingsley Mensah conducted a return on investment analysis for LEEP graduates (Estabrook, 2001). If the graduate remained in Illinois as a librarian, their return on investment was $15.23 per dollar invested over the remaining life of the individual. This figure was significantly higher, $29.52, for those who later worked in non-library occupations.
Other budget information reported by Estabrook for FY1996 to FY2002 shows that in 1996 the GSLIS budget was $1.1 million and in 2002 it grew to $3.3 million, directly attributable to LEEP. During that same time, the school’s percent of the academic budget doubled from .4 to .8 percent. (2001, pg 78) In 2010-2011, GSLIS’s LEEP students represented 25% of all online graduate students at UIUC with a $300 cost per instructional unit (IU).
There were other returns on investment that weren’t monetary, but represented important benefits to students. The five benefits detailed by Estabrook (2001, p 77) are the following: (1) LEEP students rapidly gain distance technology skills. (2) Asynchronous technologies enrich GSLIS teaching and learning for all students. (3) With LEEP-generated funds, students have access to more courses from additional faculty hired from around the country. (4) All GSLIS students benefit from the diverse and international perspectives of LEEP's international student body. (5) All students benefit from the extracurricular activities such as workshops and and lectures that are taped for the LEEP students.
In addition, Estabrook (2001, p 78) described five important benefits to the school. (1) All GSLIS faculty have become quickly proficient in asynchronous technologies, making LEEP the only LIS degree program recognized with the Sloan-C award for the Most Outstanding Asynchronous Learning Network (ALN) in 2001. (2) On-campus students have access to courses via the ALN that they would otherwise not have. (3) There is a cost savings of 3-4 additional course sections because on-campus and Fridays-only students enroll in LEEP courses. (4) The LEEP budget supports faculty computer upgrades every 2-3 years. (5) The retention of 3-5 students per year is due directly to the high quality of the LEEP technology staff.
Additional money for long term planning of eLearning
Univerity of Illinois is a research university and GSLIS currently has $16M in research grants in progress with funding from a wide range of government funders, private foundations and corporate partners. A review of the GSLIS 2010 Showcase of Research Abstracts shows that many of them are related to technology and learning, such as broadband technology and iPhone applications. In addition, one multi-year grant started in 2007 is funded by the Institute of Museum and Library Services for the development of the Information in Society concentration at GSLIS. As LEEP is a scheduling option and not a cost center, it directly benefits from the research and development funded by these grants.
Conclusion